6 things you should know about reverse mortgages

Feb 7, 2018, 2:46 PM


SPONSORED — Got retirement anxiety? If you’re worried about your financial future, it might be time to see things in reverse – through a reverse mortgage, that is. While there are many misconceptions about reverse mortgages, this wealth-building tool could help you secure your financial future. Here’s what you need to know about reverse mortgages.

It’s not your kids’ mortgage

If you’re retired or nearing retirement, you’re probably not keen on the idea of tying yourself to a new mortgage, but that’s exactly what makes a reverse mortgage great for retirees.
“The FHA reverse mortgage works like any other mortgage, except there are zero monthly mortgage payments required,” said Laura Kiel , co-founder of Kiel Mortgage. “The payment normally paid each month on a regular mortgage is simply deferred until you no longer need the house.”

That means you’ll have the flexibility you need to purchase a new home, make home improvements, pay off debts, eliminate a current mortgage payment, secure a line of credit that grows over time or simply generate additional monthly income.

The older you are, the better it is

Wine and cheese aside, not many things in life get better with age. But when it comes to securing a reverse mortgage, those golden years will actually help you. But that doesn’t mean you want to hold out forever. Once you’re 62, the earlier you secure a reverse mortgage, the better. That’s because your potential line of credit will only grow over time.

It makes your equity work for you

Reverse mortgages are all about equity, so if you’re sitting on (or living in) a gold mine, this loan allows you to use a portion of that to your advantage.

“A lot of people have a lot of equity in their home, but no way to access that equity,” said Kiel. “Reverse mortgages allow them to access equity without making a monthly mortgage payment, or even buy a new home without exhausting their cash.”

It’s all about freedom

When you think about a traditional mortgage, you likely consider the responsibility of making a mortgage payment for 30 years. But that’s where a reverse mortgage can feel like a little breath of freedom.

“Reverse Mortgage Loan Reverse mortgage programs allow individuals over the age of 62 to access a portion of their home’s equity, or purchase a home in a very unique fashion,” explained Kiel. “Reverse mortgages are more than a loan program; they are a government insured loan program that was established in 1988 to provide homeowners with the financial security they need to fully enjoy their retirement years.”

You can slice and dice as you like

Think of a reverse mortgage as a team player; it’s ready to help however it’s needed. When you secure a reverse mortgage, you can choose how to use that home equity. According to reversemortgageguides.org, your distribution can include a lump sum of cash at closing, equal monthly payments for as long as you live in your home or for a fixed number of years, a line of credit or any combination of the three.

It can stretch your retirement

According to Forbes, Americans are “vastly unprepared for retirement to the tune of roughly $4.13 trillion.” With home equity a major source of wealth for most Americans, a reverse mortgage can help seniors stretch their Social Security payments a little further.


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6 things you should know about reverse mortgages